{"id":915830,"date":"2026-09-30T22:30:09","date_gmt":"2026-09-30T22:30:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/915830\/"},"modified":"2026-09-30T22:30:09","modified_gmt":"2026-09-30T22:30:09","slug":"panama-commission-urges-orderly-closure-of-first-quantums-cobre-mine","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/915830\/","title":{"rendered":"Panama commission urges orderly closure of First Quantum\u2019s Cobre mine"},"content":{"rendered":"

Panama should negotiate a restart of First Quantum Minerals\u2019 (TSX: FM) Cobre Panama mine to fund its eventual orderly closure<\/a> without burdening the state, a ministerial committee has recommended President Jos\u00e9 Ra\u00fal Mulino.<\/p>\n

The three-minister commission recommendation follows an audit conducted by independent Swiss consultants, along with an assessment of the mine\u2019s economic, environmental and legal implications. The commission stressed that its proposal was not a final decision, which rests with the president.<\/p>\n

BMO analyst Matthew Murphy said the recommendations point toward negotiations that could allow Cobre Panama to operate long enough to meet Panama\u2019s objectives, rather than an imminent shutdown. The commission\u2019s report cites a 25-year active mine life as an illustrative example, he noted.<\/p>\n

\u201cWe believe Cobre Panama likely needs to run for decades to satisfy these objectives,\u201d Murphy said in a note. \u201cRisks are elevated but mutually agreeable solutions that preserve value remain possible.\u201d<\/p>\n

The document<\/a> offers a potential route through the economic, legal and environmental problems surrounding Cobre Panama: generate revenue from renewed operations to finance a controlled shutdown rather than leave Panama responsible for the cost. The mine produced about 1.5% of global copper before mining stopped and was one of the country\u2019s largest private investments.<\/p>\n

Panama\u2019s Supreme Court\u00a0ruled in 2023<\/a> that First Quantum Minerals\u2019 contract to operate Cobre Panama, the only mining operation in the Central American country, was unconstitutional. Challenges against the\u00a0contract piled up in court following public protests against the deal signed that year by the government and First Quantum\u2019s local subsidiary, Minera Panama.<\/p>\n

Murphy highlighted a potentially important distinction in the commission\u2019s report: the 2023 court decision declared the mining contract unconstitutional but, according to the report, did not prohibit mining activity itself. That could leave room for the government and First Quantum to negotiate a new legal framework for operations.<\/p>\n

Any agreement should prevent an extension of the mine\u2019s operating period and resolve outstanding international arbitration proceedings, according to the committee. Mulino has not made a final decision on the mine\u2019s future.<\/p>\n

Resolving those proceedings is central to the commission\u2019s recommendations, Murphy said. Claimants are seeking a combined $27 billion through arbitration, while the proposed framework would establish conditions for a restart capable of financing what the commission calls an \u201corderly, self-funded closure.\u201d<\/p>\n

First Quantum said late on Wednesday<\/a> it would engage \u201cconstructively and in good faith\u201d with Panama on a new legal framework for Cobre Panama that is fair, transparent and consistent with the country\u2019s Constitution and laws. <\/p>\n

The miner also noted that the commission makes termination of the pending international arbitrations a mandatory condition of any agreement.<\/p>\n

Eight guiding principles<\/p>\n

The commission laid out eight principles for any new arrangement. It said Panama, as owner of the mineral deposit, should act as more than a state collecting royalties from a mining concession. The government should independently verify financial flows from the operation rather than rely solely on figures reported by the operator, while exercising effective oversight and requiring transparency over both the mine and the use of revenue it generates.<\/p>\n

The framework also calls for a definitive closure date with no renewal or extension, prohibits further expansion of the mine site and requires operations to adapt to a progressive shutdown. A clear mechanism would also have to be established to restore and rehabilitate the site, while the use of mining revenues would be subject to transparent mechanisms open to public scrutiny.<\/p>\n

\u201cA closure isn\u2019t done in one year, nor in five years,\u201d Commerce and Industries Minister Julio Molt\u00f3 said in a press conference<\/a>.<\/p>\n

Molt\u00f3 said the committee\u2019s proposals were based on visits to communities surrounding the mine<\/a> rather than assessments conducted solely from government offices. He and his team toured Donoso, Omar Torrijos Herrera and La Pintada, where they met mine workers, local authorities and suppliers before presenting their findings as part of the government\u2019s review of Cobre Panama\u2019s future.<\/p>\n

First Quantum noted that a sustainable path forward should provide long-term stability and tangible economic benefits for Panama through employment, workforce development, local procurement, community investment and broader economic contributions.<\/p>\n

Closure costs<\/p>\n

Economy and Finance Minister Felipe Chapman backed an orderly closure while arguing that Panama should not bear its financial cost. The abrupt shutdown inflicted a substantial economic blow<\/a> to the nation, he said, eliminating thousands of direct and indirect jobs while cutting government tax and royalty revenue.<\/p>\n

The recommendation is in line with President Mulino\u2019s previous statements framing a mine reactivation as an \u201copen to close\u201d plan. The giant Cobre Panama mine, which produced as much as 1.5% of global copper before mining stopped in 2023<\/a>, accounted for about 5% of Panama\u2019s gross domestic product that year, according to First Quantum.<\/p>\n

First Quantum shares plunged as much as 36% in early trading in Toronto as the market reacted to the government\u2019s framing of renewed operations as a mechanism for eventually shutting Cobre Panama. They were last changing hands at C$31.1 apiece, leaving the miner with a market value of C$25.9 billion ($18.2 billion).<\/p>\n

Murphy said investors may be putting too much weight on the closure language and not enough on the potential duration and economics of renewed operations.<\/p>\n

\u201cThe immediate market response to this report has been to focus on the risk of closure,\u201d Murphy said. \u201cHowever, we believe the full report details offer a more promising frame of reference and believe a mutually agreeable negotiated outcome is possible that would preserve substantial asset value for First Quantum and satisfy all of Panama\u2019s objectives.\u201d<\/p>\n

What comes next<\/p>\n

The commission\u2019s deliberations follow months of study into the consequences of shutting one of Panama\u2019s largest private investments. A government study published in September found the closure eliminated close to 36,000 jobs and reduced taxes and royalties flowing to the state by nearly $1.4 billion.<\/p>\n

Environment Minister Juan Carlos Navarro argued the mine should never have been built and characterized the problem of closing it as one inherited from the previous administration.<\/p>\n

Cobre Panama was First Quantum\u2019s largest revenue generator before its shutdown, accounting for about 40% of company revenue. Its closure followed nationwide protests over environmental concerns and the terms of the mining concession. <\/p>\n

First Quantum resumed processing in July previously mined stockpiled ore<\/a> with government authorization, an activity that does not amount to reopening the mine for new extraction. The company restarted one of three milling circuits during the second quarter and continues to forecast production of 30,000 to 40,000 tonnes of copper from stockpiles this year.<\/p>\n

The stockpile program forms part of the government-approved preservation and safe-management plan. Panamanian authorities have said processing the material can reduce environmental risks associated with leaving mineralized ore exposed to rainfall.<\/p>\n

President Mulino must now determine whether negotiations with First Quantum can produce an arrangement that addresses the commission\u2019s recommendations while generating enough economic value to cover a permanent closure plan.<\/p>\n

First Quantum said it is awaiting guidance from Panama\u2019s government on the next steps for negotiations following the commission\u2019s recommendations.<\/p>\n

Murphy\u2019s reading of the report suggests that could mean years or even decades of renewed mining before closure, provided First Quantum and Panama can settle the legal disputes and agree on terms that meet the government\u2019s economic and environmental objectives.<\/p>\n